January 6, 2006
I'm writing to briefly address the continuing rumors we are hearing about a strike. The most persistent
rumor is that the union plans to call a strike sometime this month. Earlier this week, it was rumored that the union would
call a strike right after its unity council meeting next week n St. Paul.
If the union does call a strike, it is our sincere
hope that you will exercise your right to continue to work, or come to work when you are scheduled to return to work. You
of course have a right to go out on strike, but you also have a legal right to work during a strike. This right to work is
protected by both federal and state law. If the union does call a strike and you have to make a choice, we hope you will choose
to work. The decision to work or strike is yours to make. But in making that choice, I hope you will carefully consider how
a strike would affect you personally.
Unlike a lockout situation, employees who go out on strike cannot draw unemployment.
That's the law in Texas. Also keep in mind that a strike could jeopardize your health insurance coverage. That is, while you
would have a right to keep your insurance in effect, you would be responsible for paying the full cost of the premium. And
very importantly, it's only fair that I tell you that it is the company's intent to operate the mill. The company's right
to operate during a strike includes the right to hire new employees on a permanent basis to replace employees who go out on
strike in support of union bargaining demands. This is an important fact of which you should be aware and carefully consider
in making a choice to work or strike.
I again want to thank you for your cooperation and hard work in helping us get the
mil! hack up to speed. For those of you yet to be recalled, thank you for your patience. I look forward to your returning
to work so we can work together for the continued success of our Beaumont operations.
VP & General Manager, ;
Beaumont Mill P.O. Box 3869 • Beaumont, TX 77704 • (409)
768-1211 • Fax: (409) 768-1090
Letter: Gerdau Ameristeel mail out to every one on 11/30/05
Effective December 12, 2005, Gerdau Ameristeel will offically begin to recall employees at the Beaumont Mill. Due to current
business conditions we will not be recalling everyone immediately, but will recall employees in stages to normalize operations
as needed to meet customer's orders.
Our current business plan will support only two shifts in the Rolling Mill, Billet Yard, Shipping, and enough Maintenance
employees to support a two-shift Rolling Mill operation. In addition, we need enough employees in the Scrap Yard to perform
switching and a small crew in the Melt Shop to begin restoring operations there.
Employees who are scheduled to be recall will receive a phone call and / or a registered letter. The purpose of this letter
is simply to keep all mill employees informed.
Please note that negotiations with the Union are ongoing and we cannot at this time advise you of the exact employment
terms that be in effect when they start up on December 12 th .
Hopefully, these trems will be determined before the end of the day on December 9th . When terms of employment are finalized,
When terms of employment are finalized, we will notify you as soon as possible.
Personally, I am pleased to make this announcement and get our team back to doing what we do best: making steel.
VP & General Manager
July 1, 2005
I would like to share with you the attached letter from our chairman and CEO, Phillip Casey, to a coworker
in response to the letter that was published in the Beaumont Enterprise.
Please take the time to read Phil's letter and
carefully consider his comments. The rhetoric of your union negotiators continues to grow in frequency and volume, but their
actions are few and far between. I am particularly disappointed in the constant misrepresentations of the facts that have
appeared in the various media recently.
I would also like to remind you that you have the right to tell your union representatives
if you disagree with their actions and decisions.
We look forward to getting an agreement and producing steel together
again soon. Call me or Jim Paull if you have any questions.
Gcrdau Ameristeel P.O. Box 3869 • Beaumont,
Texas 77704 • (409) 769- 1003 • Fax: (409) 769-1007
June 24, 2005
I recently read your letter in the Beaumont Enterprise. I appreciate the sincerity of
your comments and your initiative to provide meaningful feedback. ! also recognize the difficult circumstances that the negotiations
and work stoppage at the Beaumont facility have created for our employees, their families, and our customers.
to cease operations until an agreement has been reached was one of the most serious decisions made during my tenure. It was
made only after full consideration of the unacceptable rate of progress in current negotiations, the union's history of protracted
discussions and numerous delays, and the impact on our employees and business as a whole.
We will continue to work to earn
your trust by informing your union committee in writing and verbally, as we have all along, of our position and actions. We
are dedicated to having a cooperative working relationship that allows us to stay competitive. The best way to start that
process is by reaching a fair contract as soon as possible.
Let me make clear that this letter is not to bargain directly
with you, or to go around your bargaining committee. Gerdau Amensteel will continue to bargain in good faith only with your
representatives for a new and fair agreement. However, in view of your letter, I do believe it is appropriate to explain to
you my positions and to refute the recent reports that I do not respect the professionalism and dedication of U.S. workers.
Nothing could be further from the truth. I value the contributions and loyalty of each and every Gerdau Ameristeel employee.
Your 27 years of company service have certainly earned you my respect. I also have the same admiration for every man and woman
who puts on a hard hat and steel-toe boots to create a product that enriches our lives and the skyline of our communities.
The steel industry has a proud heritage that often fails to receive the recognition it justly deserves. My primary goal is
to ensure this steel legacy is preserved in an increasingly competitive and hostile global steel market.
The report of
a single journalist is being used as a diversion to keep a misinterpretation of my comments at the forefront. The recent advertising
campaign is a personal assault against me at a time when everyone's positive energy should be focused on returning to the
negotiations table and reaching a fair agreement. I would ask that, instead of relying on these distortions, you research
my track record for the
II years that I have been CEO of Gerdau Ameristeel
Judge my character by the integrity and fairness
of my decisions on employee well-being and business issues, particularly during recent years of extremely difficult industry
conditions. Compare Gerdau Ameristeel's record of employment growth, job security, employee engagement and competitive wages
and benefits to the ravaged expectations of large employee segments in our domestic industry. I also stand by my performance
record of prudent business judgments that have been necessary to avoid hollow promises and ensure the preservation of this
organization. These facts and the opinions of the thousands of employees at our 72 other operations are more reliable than
the published misrepresentations about me.
In Pittsburgh, I spoke about the urgent need to consolidate and transform the
North American steel industry to remain competitive in the 21st century. We need to rebuild our technical and leadership resources
and draw upon the American spirit to regain our competitive position in the global market. These were positive comments designed
to challenge and stimulate the commitment of all stakeholders who are interested in the revitaltzation of our industry.
comments about benefits were intended to convey the fact that corporations in other countries are not faced with the same
escalating medical and pension costs as American companies. Foreign governments subsidize or publicly fund employee benefits
in many countries. I do not promote the abolition of essential benefits but do ask that we assess what promises are realistically
deliverable. Recent steel company bankruptcies, and those companies' abandoning their medical and pension promises, are clear
signals of the ruthless reality of the global steel market.
Another comment you made in your letter is that our contract
proposal is highly concessionary. The company's proposal is fair, offers salary increases or lump sum payments to every employee,
provides sound health care benefits, and enhances job security. The proposal is designed to be a positive step forward for
every Beaumont employee and the long-term future of the mill. There are some changes that the company seeks on vacation and
daily overtime but these are far outweighed by more positive changes and investments in keeping the mill successful for the
The delays in negotiations have been due to the unavailability of union representatives. We believe they are
trying to coordinate contract bargaining across our network of operations. While the representatives wait for other contracts
to expire so they can pursue an international agenda, Beaumont employees remain out of work. The representatives have met
with the company for only seven days in the last 84 days. They now say they are unavailable until the week of July 18. Their
delays and unwillingness to introduce any degree of flexibility are preventing progress toward a fair contract that serves
the economic interests of the local Beaumont employees. Gerdau Ameristeel is ready to return to the negotiations when the
local union representatives are prepared.
We recognize that change is difficult, but insistence on no change is a radical
position that is not prudent in today's dynamic steel environment. Your point about the favorable financial results of 2004
is valid but that brief spike is now over. The rod market is under severe import pressure and the performance outlook for
demand and pricing is extremely uncertain. If the Beaumont facility is to remain economically viable, it will require the
urgent reinvestment of cash to update systems and equipment. Gerdau Ameristeel is prepared to make that capital commitment
if a four-year labor agreement can be achieved.
If the leadership of Local 8586 is willing to acknowledge the reality of
the rod market and seek reasonable compromises, there is no obstacle that cannot be overcome to achieve a fair agreement that
meets the needs of employees and ensures the Beaumont mill's long-term operations.
Phillip E. Casey
/ Chairman and CEO /
Executive Offices 4221 'W. Bay scoot BouJevard, Suite 60S « Tampa, Florida 33607 « P.O. Box 31328
« Tampa. Florida 33631-3528 * (813) 286-8383 • (800) 637-8144
May 26, 2005
The purpose of this letter is to explain Gerdau Ameristeel's position on its offers. It is not our intention
to bypass the Union as your representative. We will continue to deal with the Union as your exclusive representative.
After meeting for four months in 22 sessions, Gerdau Ameristeel's Last, Best and Final proposal was presented
to your union negotiating committee on May 9, 2005. We regret that, despite our good-faith efforts, the union committee has
left us no bargaining room on aspects of the agreement that are key to the long-term, successful operation of the mill. For
that reason, the company has elected to exercise its right as provided by the National Labor Relations Act (NLRA) to cease
operations at the Beaumont mill until such a time as a satisfactory agreement can be reached.
A major point of disagreement in the negotiations has been the term of the Agreement. The Union has insisted
on an agreement that would expire on March 31, 2007. hi order to reduce the uncertainty and anxiety of the collective bargaining
process and ensure long-term stability for the operations, the Company has urged the adoption of an agreement that would expire
on March 31, 2009. After much discussion, the Company offered the Union two options:
Option A: An agreement with an expiration date of March 31, 2007, with no changes in the current wages and
Option B: An agreement with an expiration date of March 31, 2009, which the Company prefers. Option B is
needed for the Company to commit S25 million in proposed improvements at the Beaumont Mill.
Option B includes:Pay-All employees are protected against pay cuts. Everyone covered under Option B benefits financially.
At the higher pay grades, which are below level when compared against independent, third-party research of the local market,
most employees gain pay increases of 4.5% on average. For pay grades that are already above market, existing employees would
be "grandfathered," during the term of the proposed agreement, at their current pay and receive a one-time, lump sum payment
of $500. Our proposal increases base wages by over $460,000 in the first year and, over the four-year term of the contract,
our offer would increase total wages by over $1.3 million.If the Option B proposal is accepted, Gerdau Ameristeel will also
implement our Partners in Performance (PIP) incentive plan, which is currently available to all nonunion employees at the
Beaumont mill. In the first two months in which eligible Beaumont employees have participated in the plan, the average bonus
has been 18.12%. If Option B is ratified, union employees would be eligible for PIP earned on a weekly basis.
The proposed health care benefits under Option B are more flexible than those provided under the expired
contract. If accepted, many participants will be able to reduce the amount they spend on quality health coverage from Blue
Cross Blue Shield. It offers different coverage options to allow all employees to select a plan that works best for them.
In an economy where steel can be produced overseas, shipped to the U.S., and still be sold for a price that
is 20% less than our current selling prices, it is important that our labor agreement allows the company the flexibility and
stability to manage our operations. Our goal is to have an agreement that allows the mill to produce high-quality products,
be adaptable to the changing steel industry, and offer good wages and benefits to employees who contribute to the overall
success of the mill. We believe Option B achieves these goals.
We urge each employee to evaluate the Company's proposals and determine if either is in your best interest.
As you are aware, you have the right to express your opinion on these offers to your union negotiating committee. We will,
of course, continue to deal with the union committee. While we prefer Option B, we are willing to reach agreement on either
option. We want to get everyone back to work soon under an agreement that promotes your success and Gerdau Ameristeel's success.
Beaumont Mill P.O. Box 3869 • Beaumont, TX 77704 • (409) 768-1211 • Fax: (409) 768-1090
Despite our good-faith efforts over the last four months the union
negotion committee has left us no bargaining room on aspects that are key long-term, successful opertion of Beaumont mill.
For this reason the has elected to exercise its right as provided
by the National Labor Relations Act (NLRA)to cease operations until such time as a satisfactory agreement can be reached.
We hope that this situation is short term and that you are able to returm to work soon.
For Employess Scheduled to Work until 7:00 p.m. on 05-26-05:
Those employees already at work at the effective time of lockout,
who are required to leave prior to the end of their shift, will be paid for their full scheduled shift or 12 hours.
For Employess Reporting to Work for their 7:00 p.m. start time on 05-260-05:
Some of our employees may not have promptly notified by the union of this action. Employees who reported for scheduled
work on-time at the front gate (7:00 p.m. CDT) on Thursday, May 26 will be paid until 7:30 p.m. CDT
In order to pay you correctly, please provide the security guard with the following information:
Last Name, First Name, Clock #, Shift Schedule, Supervisor.
We remain otimistic that you will be back at work soon.
Philip K. Bell interview with The Beaumont Enterprise
Newly-merged union gets first test of strength
The new union emerging from a Las Vegas convention last week will have an opportunity to flex its muscle
this week as contract negotiations between steel workers and Gerdau Ameristeel get under way in earnest. The new union, which
will use the easy acronym of USW, combines the .United Steelworkers of America with the Paper, Allied-Industrial, Chemical
and Energy workers union.That merger resulted in forming the largest industrial union in North America,
with about 850,000 members. Oil contracts, which will expire next February, are expected to extend for another three years,
assuring refiners and their union employees alike of more stability. Stability is what Gerdau also wants, said Philip K. Bell,
Gerdau's director of human resources.
In an interview with The Beaumont Enterprise last week, Bell said Gerdau is seeking a four-year agreement
with members of Local No. 8586, which represents about 265 members of the 350 employees at the mill on the east bank of the
Neches River across from the Port of Beaumont. Gerdau Ameristeel acquired the former Cargill Inc. -owned North Star Steel
mill and other mills around the country in November for $266 million. Gerdau's North American head-quarters is in Tampa,
Fla. "We're committed to steel in Beaumont," Bell said. "Our focus is on making steel profitable."
That's been an elusive goal for American steel makers for the past few years, and the Bush administration
in 2003 reacted by slapping a tariff on low-priced steel imports that were flooding the market at the time. The tariffs ended
in 2004, after helping the U.S. industry rebound, and the Commerce Department recently announced it would extend the Steel
Import Monitoring and Analysis System that checks on the amount of imported steel hitting American docks. For Gerdau, a simple
glance across the Neches could tell it a lot. One of Gerdau's main products is wire rod, which has a variety of uses —
in construction and in consumer goods. Gerdau uses scrap steel to spin out rod from its mill in Beaumont and three others
it acquired from Cargill.
At the Port of Beaumont's docks, longshoremen frequently unload ships filled with coiled wire rod as well. It's a reason
the Commerce Department is continuing its monitoring program through March 2009 and will expand to all basic steel mill products
to guard against unfair imports. Steel made abroad often is not produced with environmental or worker protections available
in the United States, which makes competition difficult. In January 2004, the former North Star and members of Local
No. 8586 reached agreement on a new contract that would be in effect for 15 months. That pact expired March 31. The
steelworkers had labored for two years before that contract under terms of an expired contract. Bell said a company
offer so far is to increase base wages by $1 million for its workforce during the course of a four-year contract with health
coverage "comparable to what they have." He said many of the employees would get increases of $1 per hour. ; "We're trying
to get a commitment to get skilled positions up to the market rate," he said.. Bell said Gerdau already intends to invest
$25 million in capital improvements at the mill, plus improvements to the buildings and grounds.
"A major goal is fairness," Bell said, referring to the negotiation for a new contract. "It would give
us the ability to operate in volatile markets."
April 7, 2005
Dear ( ):
We want to continue with our recent communications efforts to keep you up to date on what's happening at our mill and the
status of the ongoing labor negotiations. It is our intent to bargain in good faith with your union representatives to reach
Our company representatives have met with the union negotiating team over 15 times since January 18 and also with a federal
mediator to discuss a new contract. We have agreed to roughly 70 aspects of the contract that are important to the overall
On Wednesday, in meetings with the union negotiating team, we presented our initial economic proposal. The union indicated
they would take the proposal under advisement. Our next meetings are not scheduled until Tuesday, April 19, after key union
representatives return from their convention in Las Vegas, Nevada, and again on April 29.
We believe that our initial economic proposal offers positive changes to the way we work together to keep our mill productive
and competitive despite weak economic conditions in the wire rod market. Our initial offer is for a four-year term and covers
the areas of wages and benefits, illustrating the importance and recognition that we place on each of our employees now and
over the long term.
Let me briefly describe what was in the initial proposal:
A four-year agreement has been proposed to ensure long-term stability for the operations at the mill and to reduce the
uncertainty and anxiety of the collective bargaining process for our employees and their families.
No current Beaumont employee will have his or her hourly pay rate reduced. In fact, we are proposing to increase wages
for many of the pay grades. To create a fair proposal, we evaluated independent, third-party research of the local market
to benchmark our pay levels against other similar industries. What we learned was that the Beaumont mill is not in line with
comparable positions in the region. To correct this, our proposal increases base wages by over $340,000 in the first year.
In fact, over the four-year time period, our offer would increase wages by over $1 million.
In addition, we are proposing to consolidate the current 24 labor grades. We feel it is important for each employee to
see substantive increases in pay between grades. Our proposal of nine (9) grades will ensure that each employee who increases
his/her skills and knowledge and advances to the next grade will see a real economic benefit - averaging over $l/hour between
labor grades versus the current system of just a few pennies.
The health benefits program currently in place at the Beaumont facility and the services offered in the program are substantial.
We are proposing very few changes to the existing program. If accepted, many plan participants will see a reduction in the
amount they contribute for health insurance.
Our goal is simple, we want to operate a mill that produces the highest quality products, is able to adapt to the changing
steel industry, and offers good wages and benefits to the employees who contribute to the overall success of our business.
We are striving to build a spirit of cooperation so that we can achieve greatness and create opportunities for each party
to share in the company's successes. We will continue to work with your union representatives to reach a new contract.
Gerdau Ameristeel's legacy demonstrates such success is possible. Our company is a steel company focused on identifying
market opportunities in the steel industry and partnering with our employees to capitalize on those opportunities.
In conclusion, we hope that all of the points we are discussing can be resolved and a new contract negotiated. As previously
mentioned, Gerdau Ameristeel has established a model for managing and operating steel mills that has proven successful. We
have committed to work without a contract for a time and will continue negotiating in good faith with your union representatives
once they return.
We will continue to keep you updated as new information becomes available. Thank you for your ongoing contribution to the
success of Gerdau Ameristeel.
Vice President and General Manager
Straight Talk on Labor
March 31. 2005
Gerdau Ameristeel management is working diligently to achieve a contract that is good for our employees and customers
and ensures the long-term success of the Company. We will continue to meet with the union's negotiating team.
We want to
provide you with some preliminary questions and answers. Q. What happens at midnight
Thursday when the contract expires?
A. The Union and the Company will continue
working without a contract. On April 1, the same operational procedures, work rules, benefits and compensation will apply
as they did today. In short, business will continue as usual. Paychecks will be issued on the same schedule, shifts report
as scheduled and the mill will continue to operate on the normal schedule.
There are three exceptions to busiress as usual:
The no-lock-out/no-strike provisions are cancelled so the union may strike at any time and the company can choose to initiate
a lock out at anytime. However, we have reached an agreement that any lock out or strike will be preceded by a four (4) hour
2. Arbitration provisions are cancelled relating to any dispute
arises after March 31 and before a new contract is executed. Note that any disputes currently in the arbitration process
will continue the set course. Please be advised that we have proposed an arbitration clause in the new agreement as has the
3. Check-off deduction will cease on the March 31 until a new contract
is in place.
Q. Why won't Gerdau Ameristeel accept the union's contract?
Both Gerdau Ameristeel and the union continue to negotiate the agreement in good faith. The parties have submitted proposals
that have been discussed extensively. As a result, a number of tentative agreements have been reached, proposals withdrawn
or modified. In short, progress has been made as the parties continue to negotiate in good faith but there are a number of
major issues to be resolved.
The parties have yet to discuss economics but, we're due to begin discussing the contract
again today at 9:00 a.m.
(Jordan Ameristeel P.O. Box 3869 • Beaumont, Texas 77704 • (409) 769 1003
• Fax: (409) 769-1007
Straight Talk on Labor
March 31.2005 Issue One
Q. Why is the company
trying to take away our seniority and overtime calculation?
A. We are not. We
are proposing to change some aspects of these areas but no final agreements have been reached. However, we've made tentative
agreements on more than 70 paragraphs of the contract. The rules of the National Labor Relations board prohibit us from negotiating
with you directly but we will continue to bargain in good faith with the union as your representatives.
We will continue
to keep you updated on material issues as the negotiation process advances.
Gerdau Ameristeel P.O. Box 3869
• Beaumont, Texas 77704 • (409) 769- 1003 • l-'ax: (409) 769-1007
Straight Talk on Labor
March 31. 2005
There have been a number of questions concerning the Company's proposal on Seniority. Here's the straight
talk about that proposal.
Rumor: The Company is going to take away our seniority.
Fact: The parties have reached tentative
agreement to use the current contract's language for seniority except the definition of seniority (consideration and recognition),
temporary vacancies in the maintenance department and lines of progression. The Company has proposed to change the definition
of seniority. Here's the Company's proposal which defines "Seniority":
7.1 Consideration. The Company and the Union recognize
that promotional opportunity and job security should increase in proportion to the length of continuous service and in the
administration of policies affecting promotional opportunity and job security, the intent will be that wherever practicable,
consideration should be given to continuous service in such cases. In all cases of promotion, decreases in force and recall
after layoffs the following factors shall be considered:
1) Ability to perform the work and physical fitness
conduct, safety and attendance
3) Plant continuous service (plant service)
Where factors (1) and (2) are relatively
equal, plant service shall be the determining factor
Fact: Actually, except for paragraph (2) "workplace conduct, safety
and attendance", most of the language in this proposal was submitted by the Union in its 173 page "BIR" model contract.
The Company is going to continue to work with the Union committee to work out our differences and achieve a satisfactory contract